Looking for Savings Opportunities in Orthobiologics




Linda Millington, RN-BSN, Consulting Director, Clinical Advisory Solutions

For years, vendors and supply chain leaders have engaged in negotiating prices for expensive implant medical devices. Every price increase was challenged, and as competition grew, the cost of these implants has gradually decreased, while the cost for orthobiologic products has actually risen three-fold. According to Becker’s Spine Review, the spinal biologics market is anticipated to hit $2.7 billion by 2023.

The April 2017 issue of Orthopedic Network News stated that from 2008 to 2016, orthobiologics grew from 104 to 229 different products on the market. With the number of orthobiologic products doubling, and the high-cost variation in product types, i.e. allograft, stem cell, etc., this one product can erode the savings negotiated on the implant and be a source for clinical variation that is increasing the cost of care without delivering measurable better patient outcomes.

In the past, it was not uncommon to use orthobiologics on a patient without much insight on how they are being used. As we begin to engage physicians to talk about variation on products that are used for the same procedures, we must show them evidence of low-cost medical procedures that can work just as well as costly ones that may not yield better results. We need to be able to answer these questions:

  • What is being used?
  • How is it being used?
  • Is there any noticeable variation in utilization for similar procedures? 
  • Does one physician’s practice get better results, better quality outcomes over another?
  • What is the cost difference of one product to another? 
  • Is there any clinical evidence to support the use?
  • What is the quality of evidence?
  • What is the reimbursement for these products?
  • What are these products costing the hospital system?
  • What are proven best practices?

Recently I took on this topic with a Vizient member hospital. Here is my journey.

After digging into their data, I noticed a very large spend for a demineralized bone matrix (DBM) with stem cells—more than $1.8 million annually. I began to ask questions. The answers were eye-opening.

The cost of this product was four times more expensive than DBMs without stem cells. The hospital was not receiving any additional reimbursement for this product. When I compared physicians to same procedure types, not all physicians were using this product. Yet their clinical outcomes were very similar.

I learned the product was introduced into the facility via a vendor relationship with one of the surgeons.  

The next big question was what evidence was there to support the use of DBM with stem cells at this excessive cost to the hospital? I reviewed the published literature, and interestingly there were no human studies to support a superior clinical outcome with the use of DBM with stem cells versus DBM in bone growth. What evidence was found was of low quality and/or funded by the vendor. The overall conclusion was DBM with and without stem cells produced bone equally. One was not superior to the other.

Armed with this information and the support of senior leadership, we met with the doctors to discuss our findings. Due to the lack of clinical evidence, variation in physician clinical practice with similar quality and clinical outcomes, and excessive cost to the hospital to use this product with no additional reimbursement, it was recommended to move to DBM only as their standard of care for a significant savings opportunity with good clinical outcomes.

As the “low-hanging fruit” becomes harder to find, expanding our focus further than just the most expensive items to consider the variances in utilization must become part of our cost reduction strategy. The goal will be to drive clinical excellence to improve patient outcomes, enhance physician engagement and ensure appropriate resource utilization. The improvements in patient care will be delivered through a shared culture of accountability.

About the author. With nearly 30 years of experience in the health care industry, Linda Millington has created physician-led teams at the division and facility levels to successfully implement enterprise best-practice initiatives, develop physician alignment within clinical strategy for medical device cost savings, and reduce avoidable clinical variation with the use of evidence-based medicine. A subject matter expert in orthopedic and spine, coupled with extensive experience in the operating room, Millington possesses a keen understanding of clinical and operational processes.

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